A Neighbor Calls: Mexican President Calder&oacute;n Visits the U.S.

About the Author

This week, President Felipe Calderón of Mexico visits the
United States. He will stop in California, Illinois, New York, and
Massachusetts but stay clear of the nation's capital and Washington
politics. The welcome he receives should be warm and hospitable.
What President Calderón says and does can help set a tone
for good relations that lasts well into the next U.S.
Administration.

Background

Mexico possesses the world's 13th largest economy, but it is the
United States' third-largest trading partner and the second-largest
market for U.S. exports. Eighty-six percent of Mexico's exports
enter the U.S. market. Two-way trade between Mexico and the U.S.
has increased by more than three times since the North American
Free Trade Agreement was implemented in 1994. As of January 1,
2008, Mexico lifted tariffs on corn, rice, beans, milk, and sugar
to encourage competitiveness in its sensitive agricultural areas.
Mexicans living in the U.S. sent home more than $23 billion in
remittances in 2006.

Many Americans are quick to forget how recently Mexico opened up
democratically. Genuinely competitive elections did not become the
norm until 2000, when Vicente Fox, the candidate of the National
Action Party (PAN), ended more than 70 years of single-party rule
by the Institutional Revolutionary Party (PRI). In 2006, President
Calderón, also of the PAN, narrowly defeated populist
candidate Andrés Manuel López Obrador of the
Revolutionary Democratic Party (PRD), whose claims of fraud and
disruptive protests lasted well into 2007. Obrador still claims to
be the legitimate president of Mexico.

Despite a limited popular mandate and commanding only a minority
of PAN members in the Mexican legislature, President
Calderón has managed to build coalitions with rivals from
the PRI and some members of the PRD. President Calderón has
already accomplished a few key reforms. A package of fiscal reform
measures promises to raise non-oil tax revenue by 2 percent of
Mexico's GDP. Other critical reforms include a scaling back of
pension payments to avoid fiscal insolvency and measures of
electoral reform that helped to establish peace among the political
parties. While the new legislation is far from comprehensive, its
passage marks an improvement over the legislative gridlock common
during the Fox presidency.

Mexico's Challenges

Mexico's President faces formidable challenges, including a
possible downturn in the U.S. market and growing global
competitiveness. He must do more to stimulate the Mexican economy,
which grew at just over 3 percent in 2007, which is lower than
forecasted and down from the 4.8 percent GDP growth rate of 2006.
The Mexican economy is so tied to the United States that any U.S.
slowdown would have a direct negative impact.

Calderón also must invest in infrastructure and human
capital and create jobs in order to make a dent in the inequality
and poverty that sends his countrymen streaming across the border.
To that end, he recently sent an ambitious $25 billion
infrastructure spending package to the Mexican Congress for
approval. Calderón must help free Mexico from the shackles
of crony capitalism that rewards monopolies and oligopolies
(especially in telecommunications and transportation), tackle labor
laws, and continue to attract foreign investment.

Mexico's most recent scorecard in the Index of Economic
Freedom gave it a global rank of 44 out of 157 ranked nations,
indicating that much more can be done in the areas of fighting
corruption, protecting property rights, and opening key sectors to
foreign investment.

On the energy front, Mexico relies heavily on its nationalized
oil company, Petróleos Mexicanos (PEMEX), both for energy
and for government operating revenue. Mexico has long been the
United States' second source of foreign oil imports. While Mexico
has benefited substantially from the rise in the price of oil, its
production is declining, and PEMEX faces key challenges. Without
significant domestic or foreign investment, Mexico may be unable to
tap large reserves deep beneath the waters of the Gulf of
Mexico.

Mexico's constitution bars private and foreign ownership in the
oil and gas industry. Leaders of the PRI have signaled a readiness
to consider strategic alliances or other options short of full
privatization to cope with declining production. As the debate
develops, the U.S. and Mexico should bear in mind that energy
futures in the Gulf of Mexico are closely intertwined and that
development may hinge on future collaboration.

President Calderón inherited from President Fox a crisis
of public insecurity. Violent drug cartels were working as a
conduit for Andean cocaine and are deeply involved in the
production and distribution of methamphetamines, marijuana, and
heroin in U.S. markets. After assuming office, Calderón
called in the Mexican military to fight the cartels in several
Mexican states. While largely a stopgap measure, the move
demonstrated Calderón's commitment to restoring public
security. Calderón has also stepped up cooperation with the
United States. In 2007, Mexican authorities extradited 80 criminal
suspects to the U.S., 65 of them Mexicans.

In the longer term, Calderón's administration has
developed a seven-point strategy that includes creating a
professional and corruption-free national federal police,
developing community policing, overhauling the judicial process,
and adding new crime-fighting technologies and training
facilities.

Areas for Cooperation

An important departure in bilateral relations is the Merida
Initiative for U.S. anti-drug assistance to Mexico. First discussed
between Presidents Bush and Calderón in Merida, Mexico, in
early 2007, the initiative calls for the expenditure of $1.5
billion over a three-year period to help Mexico acquire aircraft,
modern scanners, polygraphs, IT training, and comprehensive
training assistance for its law enforcement agencies. While the
Initiative does not call for American military boots on the ground,
it does promise greatly enhanced cross-border cooperation and the
sharing of key anti-drug, anti-crime intelligence.

Because of the Merida Initiative and improving cooperation
between U.S. and Mexican officials, U.S. law enforcement agencies
are taking a more urgent look at the southward flows of arms and
dollars from the U.S. that sustain the drug cartels' reign of
terror in Mexico.

As the national leader for all Mexicans, President
Calderón is required to defend the dignity and rights of
even the humblest citizens. Yet President Calderón should
walk a careful line on U.S. immigration issues. He must avoid
appearing nationalistic and interjecting himself and the prestige
of his office into ongoing domestic debates and the U.S.
presidential campaign. In the U.S., President Calderón will
face audiences as sensitive to issues of sovereignty as those that
American leaders encounter when they visit Mexico. It would be
prudent for President Calderón to avoid intervention in
issues regarding the interpretation and enforcement of U.S.
laws.

The Border

Securing the border remains a critical objective for U.S.
domestic policy, one that is best approached with a pragmatic
attitude and a clear-headed recognition on both sides of the Rio
Grande that the border is broken and the status quo is untenable.
Immigration reform in the U.S. is necessary to restore a proper
balance between economic and legal realities, the growing and
changing labor force and citizen base, and national security and
sovereignty.

A familiar adage is "good fences make good neighbors." In its
New England origin, the adage refers to stone fences that are
commonly constructed to mark property lines and to keep livestock
from straying. Building and repairing these fences after winter
storms were often acts of cooperation, a sign of respect for shared
boundaries. The U.S.-Mexican border is an area where both parties
share ownership and responsibility for resolving outstanding
issues. All parties must ask, as Robert Frost did in "Mending
Fences," "What I was walling in and walling out?"

President Calderón's agenda and itinerary in the U.S.
should focus on the following key points:

Growing the Mexican economy and exploring ways the U.S. and
Mexico can work together to expand trade, create jobs, open the
Mexican economy, and improve global competitiveness;

Exploring areas for energy development, cooperation, and
security;

Examining new ideas and partnerships for developing human
capital with education, job training, and environmental
protection;

Demonstrating the urgent need for a major cooperative effort to
fight drug cartels and the drug trade on both sides of the border;
and

The United States has a critical stake in a democratic, stable,
and prosperous southern neighbor. Mexico faces many challenges, but
Americans should not discount the progress it has made. The U.S.
and Mexico must work together on issues critical to both countries,
most notably fixing the border and winning the war on drugs.
President Calderón's visit is a perfect learning opportunity
and should set a framework for cooperation that extends well into
the next U.S. Administration.

Ray Walser is Senior Policy Analyst
for Latin America in the Douglas and Sarah Allison Center for
Foreign Policy Studies, a division of the Kathryn and Shelby Cullom
Davis Institute for International Studies, at The Heritage
Foundation.